Finding Growth in an Uncertain Environment

Equity investors are grappling with many uncertainties, including inflation, interest rates, geopolitical tensions and the trajectory of economic growth. 

But we believe there is still long-term return potential to be found despite the challenging environment. The key is asking the right questions to help identify companies with the right features which can help overcome headwinds to earnings. 

The Challenge

Not all companies are equally vulnerable to unpredictable market and macroeconomic forces. For example, dominant market positions often support sustainable growth, providing a company with a greater degree of control over its fate. Wide competitive moats and high barriers to entry are key ingredients for a market-leading position. 

When macroeconomic trends are a huge driver of market movements, it tends to cloud investors’ vision of company-specific developments that ultimately determine future equity returns. We believe that by studying company fundamentals—where our analysts have skill, knowledge and experience—we’re able to better understand how businesses may fare under a range of likely outcomes.

To find growth, we look for companies that can benefit from long-term growth trends in sectors and industries, as well as broad themes that generally don’t depend on cyclical macroeconomic growth. This approach helps us identify stocks from diverse industries with differentiated sources of growth potential that have what it takes to deliver returns through much tougher conditions.